Recording (real estate)

A grantor/grantee title search attempts to locate records by searching the parties listed on a recorded instrument. One approach to conducting a full grantor/grantee title search starts by searching the grantor index in the County records and determining the name of the first recorded owner of title. This is usually the sovereign, which is the federal government or the Crown of the nation which owned a former colony now located within the United States. The search finds the grant from the sovereign to the first grantee. This is usually in the form of a patent. Then, the grantee's name is searched in the grantor index to find the deed by which it has subsequently conveyed the title, and so forth until no more grants are found. Liens or encumbrances granted by any of the parties shown on recorded instruments are also found in the search. Though theoretically accurate, this approach has practical difficulties due to there often being numerous grants from the sovereign. Therefore, an alternative method is to reverse the process, i.e. to search backward in the grantee index. This is done by beginning with the name of the person or entity who is thought to own the land to find the grantor to it. Then the grantee index is searched again to find the source of that grantor's title, and so on until you reach the grant from the sovereign. These linkages from grantor to grantee are called the "chain of title". The last grantee found is the "record title holder".[3]

In municipalities with a large population and states that do not support tract indices, the Grantor/Grantee method can be time-consuming and difficult altogether due to common names within the index. In these municipalities, a geographic index is often created to aid in title searching. In this system, each document is posted in both a Grantor and Grantee index in addition to being posted to indexes describing attributes of the property's location such as a lot number, subdivision name or Parcel Identification Number (PIN). With a functioning geographic index, a search can be done with a combination of a grantor/grantee, legal description or PIN search.

Each U.S. state has a recording act, a statute which dictates the legal procedure by which an individual claiming an interest in real property (real estate) formally establishes their claim to that property. The recordation of property rights becomes particularly significant where an unscrupulous dealer in land purports to sell the same tract of land multiple times. With other kinds of property, the first buyer would be the owner of the property, and later owners would have no interest in the property and would instead have a cause of action against the original seller for fraud. With real property, however, the first buyer is not necessarily the owner, depending on the kind of statute under which the recording of such property interests operates. There are three basic kinds of statutory schemes in recording acts: race, notice, and race/notice.

Even though a recording act does not require recordation, the law does create strong incentive for a buyer to record. Recordation provides constructive notice to any subsequent purchasers that a prior conveyance occurred and therefore protects the prior purchaser in the event of a subsequent conveyance.

Under a race statute, whoever records first wins. Thus, if Oscar purports to sell a piece of land to Alice for $100,000, and the next day purports to sell exactly the same piece of land to Bob for another $100,000, then whichever of the two buyers is the first to reach the recording office and have the sale recorded will be deemed the owner of the property. Thus, if Bob is the first to record the conveyance, he will be the owner even if he knew about the prior conveyance to Alice. Race statutes are extremely rare because it is generally viewed as unfair to protect a party who had actual notice of a prior conveyance. Currently, Delaware, North Carolina, and Louisiana are the only jurisdictions where a race statute is in effect. The benefit of a pure race statute is that it encourages all grantees to record their interest quickly.

Under a notice statute, a subsequent purchaser for value wins if, at the time of conveyance, that subsequent purchaser had no actual or constructive notice of the prior conveyance. In short, a subsequent bona fide purchaser wins. Thus, if Oscar purports to sell a piece of land to Alice for $100,000, and the next day purports to sell exactly the same piece of land to Bob for another $100,000, then Bob will own the land so long as he was not aware of the prior sale to Alice. However, note that if Alice records her interest before Bob's purchase, this recordation will be deemed to give Bob constructive notice. If Bob purchases the land without notice, and Alice then records her prior purchase before Bob records his own purchase, then Bob will still prevail in ownership of the land. The benefit of a pure notice statute is that it encourages Alice to record quickly, but if Alice records after Bob's purchase, Bob has only limited incentive to record his conveyance immediately. This can leave the land records incomplete for an indeterminate amount of time and could cause Alice to make improvements of which she might be divested by Bob's later recorded deed.

Currently, Alabama, Arizona, Connecticut, Florida, Illinois, Iowa, Kansas, Missouri, New Hampshire, New Mexico, Oklahoma, Rhode Island, South Carolina, Tennessee, Texas, Vermont, and West Virginia are the jurisdictions where a notice statute is in effect.

Under a race/notice statute, a subsequent purchaser for value wins if (1) at the time of conveyance, that subsequent purchaser had no actual or constructive notice of the prior conveyance, and (2) the subsequent purchaser records before the prior purchaser. In short, a subsequent purchaser in good faith wins only if he records before the prior purchaser does. In this type of system, if Oscar purports to sell a piece of land to Alice for $100,000, and the next day purports to sell exactly the same piece of land to Bob for another $100,000, then Bob will own the land only if he was not aware of the prior sale to Alice, and if Bob actually records his interest before Alice does. In the hybrid race/notice statute, all grantees have a strong incentive to record early, thereby making the land records complete.

Currently, Alaska, Arkansas, California, Colorado, District of Columbia, Georgia, Hawaii, Idaho, Indiana, Kentucky,[5] Maine,[6] Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Jersey, New York, North Dakota, Ohio (regarding mortgages, Ohio follows the race statute), Oregon, Pennsylvania (regarding mortgages, Pennsylvania follows Race), South Dakota, Utah, Washington, Wisconsin,[7] and Wyoming are the jurisdictions where a race/notice statute is in effect.